Chinese e-commerce giant Alibaba is set to invest in India’s largest online grocer BigBasket. BigBasket have been inspecting for a potential buyer from the start of the year, and reports surfaced in July, that Alibaba through its investee firm Paytm was eyeing a stake in it. The investment could maintain the number of $300 million, giving Alibaba about 33 percent stakes in the e-grocer, the reports says.
The offer could value Bengaluru-based BigBasket around $850-900 million, a valuation turned out seeking since it started out looking for buyers. It is also assumed that BigBasket got held discussions with Amazon earlier in the entire year, but fizzled from ground of undervaluation. Amazon, meanwhile, is ramping up its food and grocery businesses in India, and has received a government permission to invest $500 million in that business. The Seattle-based e-retailer has recently examined services like Pantry and Amazon Now in India.
As for BigBasket, close to 40 percent of it would be owned or operated by the Alibaba-Paytm Mall combine after the deal undergoes. The transaction is likely to be carried out in two parts: an initial fund infusion of $220 million, and a purchase of stocks well worth $80 million from BigBasket’s existing shareholders. “The deal is expected to be announced soon. The ultimate curves of the extra transaction are still being chalked out”, according to the report. Previously, BigBasket had been eyeing at investment of $200 million.
Alibaba has already sought approval from the Competition Commission of India (CCI) to buy into BigBasket. The CCI notice stated, “The proposed mixture relates to the acquisition and purchase of stocks of Supermarket Grocery store Supplies (BigBasket parent) by Alibaba Singapore.” However, it didn’t details the proposed investment framework.
This deal would create three strong entities – Amazon Retail, Flipkart and BigBasket in the domestic online grocery segment that has already been growing at more than 50 percent. And Alibaba’s intrest for the space perhaps stems from the actual fact that India is among the top five e-grocery marketplaces in Asia-Pacific, according to research company Euromonitor.